Morning Update

Bulls Looking to Ride After Yesterday's Slide

After falling solidly on concerns in the financial sector and uneasiness regarding the health of government global debt, stocks are higher in early action, led by technology issues after favorable earnings reports from Oracle and Research in Motion. Treasuries are under pressure with the equity markets moving higher, as there are no major economic reports scheduled for release today. In other equity news, Nike also exceeded the Street's profit projections to aid sentiment in morning trading. Today is quadruple witching day-the simultaneous expiration of options and futures contracts-which may be adding some volatility to today's move. Overseas, Asian markets came under pressure as the Bank of Japan vowed to fight deflation and financials gave back some weekly gains on the announcement from a global banking regulator pertaining to strengthening capital and liquidity. Elsewhere, financials are limiting an advance in Europe that came from a favorable business confidence report out of Germany-the eurozone's largest economy.

As of 8:50 a.m. ET, the March S&P 500 Index Globex future is 6 points above fair value, the DJIA is 50 points above fair value, and the Nasdaq 100 Index is 12 points above fair value. Crude oil is higher by $1.30 at $73.95 per barrel, and the Bloomberg gold spot price is up by $5.18 at $1,104.08 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is up 0.1% at 77.78.

Oracle (ORCL $23) reported fiscal 2Q EPS ex-items of $0.39, three cents above the consensus of Wall Street analysts, as revenues grew 3% versus last year to $5.9 billion, topping the Street's $5.7 billion forecast. The business software company said it took market share in every region in the world from rival SAP (SAP $45) for the fourth-straight quarter, on strength in software sales. ORCL added that it expects the European Commission to "unconditionally" clear its acquisition of Sun Microsystems (JAVA $9) in January. Shares are higher.

Research in Motion (RIMM $63) is nicely higher after the maker of the BlackBerry device reported 3Q EPS of $1.10, six cents above the Street's forecast. RIMM's revenues rose 11% versus the previous quarter to $3.92 billion, above the $3.8 billion forecast of analysts, and 41% higher than last year. The company said it shipped more than 10 million BlackBerry smartphones during the quarter. RIMM issued 4Q guidance that topped analysts' expectations.

Nike Inc. (NKE $63) reported fiscal 2Q earnings of $0.76 per share, five cents above the expectations of analysts, with revenues falling 4% versus last year to $4.4 billion, inline with expectations. The athletic apparel company said its worldwide futures orders scheduled for delivery from December 2009 through April 2010 totaled $7 billion, 4% higher than last year, but down 1% after excluding currency changes.

No major economic reports on the docket

Treasuries are lower in early action as there are no major economic releases scheduled to be reported today. This week the markets have gone through some mixed emotions as traders digested conflicting reports while trying to determine the sustainability of the economic recovery. Inflation painted a confusing picture as producer prices came in hotter than expected but failed to be passed on as consumer prices came in tame. Moreover, regional manufacturing reports also painted different landscapes as the Empire Manufacturing Index-depicting business activity in New York-deteriorated much more than expected in December, while the Philly Fed Manufacturing Index showed Mid-Atlantic activity unexpectedly improved.

However, the event that captured the most attention was the Federal Open Market Committee's final monetary policy meeting of the year, in which they kept the fed funds rate unchanged at a range between 0.00-0.25%, and left the "extended period" and "exceptionally low" levels of the fed funds rate language in its accompanying policy statement, as widely expected.

Early gains in Europe wane in afternoon action

Stocks in Europe have given up a majority of early gains and are modestly higher in afternoon action as traders grapple with lingering global government debt concerns and a better-than-expected business confidence reading out of Germany-Europe's largest economy. Financials are under pressure and the worst performers in Europe, while basic materials and oil and gas issues are among the best performers across the pond after the German Ifo Business Climate Index increased to the highest level since July 2008, rising from 93.9 in November to 94.7 in December, above the 94.5 consensus forecast of economists surveyed by Bloomberg. Other economic data that was released included German producer prices rising by a smaller amount than expected, UK consumer confidence unexpectedly falling, French business confidence missing forecasts, and Italian industrial orders increasing at a slower pace than anticipated. In equity news, Irish discount air carrier Ryanair (RYAAY $25) is higher after it said it ended talks with Dow member Boeing (BA $54 ¹) to purchase as many as 200 aircraft on a disagreement on contractual terms. In M&A news, Brazilian steel company CSN (SID $33) offered to acquire Cimpor Cimentos de Portugal (CDPGF $8) for 3.86 billion euros ($5.6 billion) to expand operations into Iberia and the Middle East.

Asia slumps following yesterday's slide in the US

Stocks in Asia were mostly lower on the heels of yesterday's solid decline on Wall Street amid festering fears in the financial sector and continued concerns about the health of global government debt. Financials were back in focus, as the Basel Committee on Banking Supervision-comprised of central bankers and regulators from about 30 countries-announced that global banks need to strengthen capital quality and liquidity by implementing standards that the Committee will develop by the end of 2010, with an aim of implementation by the end of 2012. Japanese banks came under the most pressure, giving back some of this week's strong gains that came on reports that the Basel Committee would delay the implantation of its standards by at least 10 years. Elsewhere, the Japanese economic calendar commanded attention in Asian trading as the Bank of Japan vowed to fight deflation as it kept its target interest rate unchanged at 0.1%, saying that the BoJ "does not tolerate a year-over-year rate of change in the CPI equal to or below zero percent," suggesting that the central bank will keep its accommodative monetary policy until the threat of deflation wanes. Japan's Nikkei 225 Index declined 0.2% following the economic and banking sector news, and after the nation's department store sales for November fell almost 12% year-over-year.

Elsewhere, South Korea's Kospi Index was 0.1% lower after department store sales rose 6.4%, but discount store sales fell 2.8%, while real estate worries and liquidity concerns amid a flood of IPOs weighed on stocks in China, as the Hang Seng Index fell 0.8% and the Shanghai Composite Index dropped by 2.1%. Meanwhile, Australia's S&P/ASX 200 Index declined 0.4% as shares in the resource heavy nation came under pressure from yesterday's steep drop in gold prices. Rounding out the day in Asia, Taiwan's Taiex Index rose 0.2%, while India's BSE Sensex 30 Index dropped by 1.0%.